Langley Real Estate

Several planks included in the Conservative Party platform could have an impact on real estate and encourage real estate as an option for small investors in Canada, according to The Canadian Real Estate Association (CREA). The Association's 83,000 member REALTORS® will be looking for action on several public policy priorities during the next session of Parliament.

Real estate is a major factor in the Canadian economy. A study prepared by Clayton Research for CREA shows that between 2002 and 2004, residential sales made through the Multiple Listing Service® generated $10.8 billion in ancillary consumer spending annually.

GST adjustment
REALTORS® point out that the Conservative proposal to reduce the Goods and Services Tax (GST) will reduce the cost of new homes, and the cost of services associated with a real estate transaction. The proposed first-phase reduction in GST would save a homeowner $4,000 on a new home selling for $400,000. Setting the GST rate at five per cent as the Conservatives propose would restore the effective rate of federal sales taxes on new homes to the level that applied prior to the introduction of the GST in 1991, when the new rate is combined with the new housing rebate.

“It all helps keep housing affordable” says Pierre Beauchamp, the Chief Executive Officer of The Canadian Real Estate Association.

Capital gains
The Conservative Party platform also calls for the elimination of capital gains tax for individuals who reinvest profits earned from selling real estate or financial investments within six months. The move would apply to physical and financial assets, potentially benefiting people who sell stocks and bonds, or properties such as cottages and family businesses.

Currently, Canadians who have financial assets or property other than a principal residence must pay tax on the capital gains resulting from the sale of a financial asset or property.

According to CREA's National Commercial Council (NCC) small-scale investors are often unable to “grow” their real estate investments because of the tax consequences when selling a small asset to buy a larger one.

“A capital gains rollover provision for small-scale investors, which REALTORS® have been proposing for several years, would introduce greater flexibility into the small-scale residential rental investment sector,” added Mr. Beauchamp. “If this tax change is implemented effectively, it will encourage more Canadians to look at real estate investment opportunities, especially with small and medium sized income opportunities.”

Property rights
The Conservative Party platform also proposes to amend the Constitution to include the right to own property, and promises to enact legislation to ensure that full, just and timely compensation will be paid to all persons who are deprived of personal or private property as a result of any federal government initiative, policy, process, regulation or legislation.

”Property owners often take their property rights for granted, but all levels of government enact countless rules and regulations that restrict property rights,” said Mr. Beauchamp. “REALTORS® believe that property rights should have the same legislative status as other rights in Canada.”

The Canadian Real Estate Association has also surveyed Canadians about property rights issues. In the 2005 survey conducted by Pollara Research, the majority of Canadians polled (88%) said it was important or very important that compensation be paid to a property owner when restrictions are placed on the use of their land. More than 90 per cent of respondents said it was important or very important that compensation be paid when property was expropriated. (CREA 24/01/2005)

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